Shares in Taiwan took a beating Friday, closing down more than 1 percent, as investors here took cues from the latest decision by the European Central Bank (ECB) and punished large-cap stocks across the board throughout the session, dealers said.
Selling also focused on the major Taiwanese suppliers to Apple Inc. after Apple shares fell sharply overnight amid disappointment over the launch of the new iPhone models, which sent the broader market even lower, the dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE) ended down 98.01 points, or 1.06 percent, at 9,164.88, after moving between 9,142.13 and 9,217.37, on turnover of NT$66.75 billion (US$2.13 billion).
The market opened down 0.49 percent in a knee-jerk reaction to the losses suffered by Wall Street and some major European markets overnight after the ECB decided to leave its current quantitative easing and its key interest rates unchanged in a policymaking meeting, the dealers said.
Downward pressure accelerated, with market heavyweights such as contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) facing relatively heavy selling pressure, while Apple concept stocks joined the list of firms in the downturn, in reflection of a 2.62 percent slide of Apple shares overnight, they said.
"Many investors expected that the ECB would expand its asset- buying program before the policymaking meeting. But it turned out that the central bank did nothing more, although the bank still stressed that the economy has downside risks," Ta Ching Securities analyst Andy Hsu said.
"After Wall Street and some European markets posted losses overnight due to the ECB decision, foreign institutional investors here simply shifted to the sell side and cut their holdings, which dragged down the local weighted index today," Hsu said.
According to the TWSE, foreign institutional investors sold a net NT$7.85 billion-worth of shares on the local main board Friday after a net buy of NT$1.80 billion seen a session earlier.
"It was no surprise that the bellwether electronics sector and the broader market trended sharply lower today amid fears over foreign fund outflows," Hsu said.
TSMC, the most heavily weighted stock in the local market, fell 1.91 percent to close at the day's low of NT$179.50, with 29.77 million shares changing hands. Led by TSMC, the electronics sector ended down 1.19 percent and the semiconductor sub-index closed 1.61 percent lower.
"The fall in Apple shares showed cautious sentiment toward the sales of the latest iPhones, since the new devices failed to impress the market. So investors here rushed to dump shares of Taiwanese suppliers today," Hsu said.
Apple unveiled the 4.7-inch iPhone 7 and the 5.5-inch iPhone 7 Plus Wednesday, and global sales are expected to start from Sept. 16, with pre-order sales already having kicked off. Taiwan is one of the markets in the first round of the global sales.
Among the Apple concept stocks, Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, lost 1.02 percent to close at NT$77.70, while Largan Precision Co. (???) shed 2.17 percent to end at NT$3,605.00, still remaining the most expensive stock in Taiwan.
In the non-high tech sector, Formosa Plastics Corp. (??) shed 2.14 percent to close at NT$77.90, and Nan Ya Plastics Corp. (??) lost 1.93 percent to end at NT$60.90, while Cathay Financial Holding Co. (??) dropped 1.94 percent to close at NT$40.45.
"Investors have to watch closely how the Taiwan dollar will move to gauge foreign fund outflows that could further affect local equities," Hsu said. The Taiwan dollar closed the morning down NT$0.095 at NT$31.381 against the U.S. dollar.
The local equity market will open Saturday to make up for a lost trading session during the upcoming Mid-Autumn Festival holiday.
Source: Focus Taiwan News Channel